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Construction Law

09/09/2013

The following post has been reposted from an Employement Practice Alert issued by Barley Snyder on August 28, 2013. The post was written by : Jennifer L. Craighead, Esquire and Joshua L. Schwartz, Esquire of Barley Snyder. Both can be reached through the Barley Snyder website at www.barley.com.

The Office of Federal Contract Compliance Programs (“OFCCP”) has taken the final step to implement controversial regulations regarding federal contractors’ hiring of veteran applicants and disabled applicants. These regulations significantly alter the metrics used by the OFCCP to determine federal contractor compliance with the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) and Section 503 of the Rehabilitation Act of 1973 (Sec. 503).

As reported previously, on July 31, 2013, the OFCCP submitted new proposed regulations implementing VEVRAA and Sec. 503 to the Office of Management and Budget (“OMB”) for approval. The OMB had 60 days to review the proposed regulations, but took less than a month. The regulations will take effect 180 days following publication, likely in early 2014.

In its announcement on August 27th, the OFCCP highlighted the following changes to existing law:

•Hiring Benchmarks, Utilization Goals, and Outreach. The final rules require federal contractors to establish annual “hiring benchmarks” for protected veterans, based on the national percentage of veterans in the civilian labor force or other data collected nationally or locally. The applicable data will be posted in the “Benchmark Database.” Similarly, the final rules provide an across-the-board seven percent (7%) utilization goal for individuals with disabilities. Hand-in-hand with these goals are specific outreach, posting, and recruitment requirements, as well as new electronic postingrequirements about employee rights and employer obligations. It is important to note that the hiring benchmarks apply across the entire workforce rather than to each individual job group. Furthermore, the benchmarks are not quotas, but rather a yardstick to measure the effectiveness of federal contractors’ outreach and recruitment efforts for veterans and the disabled.

•Increased data collection and record-keeping requirements. Federal contractors and subcontractors will be required to document, maintain, and update documents and calculations annually regarding veterans and individuals with disabilities, such as referral data, applicant and hiring data, physical and mental job qualification requirements, and job fill ratios. This data must be maintained for three years and will be used during audits to spot trends.

•Changes to the current self-identification process. When an applicant is considered for employment, as well as at the post-offer stage, federal contractors are required to invite individuals to voluntarily self-identify as a veteran or an individual with a disability. The regulations includesample invitations that federal contractors may use. The regulations implementing Sec. 503 also require employers to invite existing employees to self-identify as disabled every five years using prescribed language. Although ordinarily employers cannot invite applicants to self-identify as disabled before a job offer is made without running afoul of the Americans with Disabilities Act (ADA), the new regulations require federal contractors to do so. The Equal Employment Opportunity Commission (EEOC) appears to have concurred with the OFCCP on this issue, stating that federal contractors may invite applicants to voluntarily self-identify, so long as the questionnaire clarifies that the information is used solely in connection with the federal contractor’s affirmative action obligations and indicates the information will be kept confidential in accordance with the ADA.

• Records access. Federal contractors must permit the OFCCP to review documents, either on-site or off-site, upon the agency’s request. Federal contractors must provide these documents in whichever format the OFCCP requests, provided the federal contractor already maintains the documents in that format.

• Job listings. Federal contractors must provide job listing information in a manner and format permitted by the appropriate state or local job service for veterans, so that the service can access and use the information to make the job listings available to job seekers.

• Required language in subcontracts. The rules require specific language to be incorporated into the equal opportunity clause of subcontracts, so that subcontractors are aware of their responsibilities under VEVRAA and Sec. 503.

• ADAAA consistency/accommodation requests. The new regulations seek consistency with the Americans with Disabilities Act Amendment Act of 2008 by expanding the scope of “disability” to the same extent as that statute.

As noted above, the final rules go into effect 180 days from publication. Barley Snyder will hold a free webinar in late September/early October to discuss each of the significant rule changes in more detail. The attorneys and paralegals in Barley Snyder’s Employment Law Group have years ofexperience assisting clients with creating Affirmative Action Plans, comprehensive self-audits, and compliance with OFCCP requests.

08/26/2013

We continued our Celebrating 40 Years of Excellence! Webinar Series with a webinar focusing on giving a Construction Industry Technical Update, presented by David Blain (Principal), Lisa White (Senior Manager), and Michael Hoffner (Partner) with McKonly & Asbury.

We focused on recent accounting and tax changes impacting the construction industry and also covered upcoming accounting guidance changes with revenue recognition and other related topics. We then provided guidance to new federal and state tax legislation that will impact contractors.

08/12/2013

This is the first in what will be a series of articles that will give construction and design industry employers five simple, straightforward tips concerning various aspects of employment law.

We will start this series with employee handbooks. Many employers have a tendency to shy away from handbooks for various reasons (if I had a dollar for every good reason I have heard for not having a handbook, I would truly have nothing). However, instead of being intimidated by handbooks, employers should be embracing them. Here are five good reasons why you should have an employee handbook (if you don’t already have one):

Handbooks Set Employee Expectations. A large number of lawsuits occur because employers and employees are operating under a different set of expectations. Handbooks allow you to clearly set forth everything from job responsibilities to disciplinary procedures, thus keeping employee expectations consistent with the employer. Experience teaches us that employees are willing to accept almost anything associated with their work if they know about it before it becomes a problem.

Handbooks Help Limit Legal Liability. Court cases have made it clear, for example, that employers without a sexual harassment policy and reporting procedure lose key legal defenses that are otherwise available under the law. And employers have greater difficulty defending themselves in everything from unemployment hearings to discrimination actions when there are no written policies available for review.

Discipline Is More Uniform With A Handbook. A written disciplinary procedure means that employers and employees alike know what to expect when a rule is violated. One of the biggest causes of losing unemployment hearings and discrimination actions is treating similar situations in a dissimilar manner. A handbook can eliminate this problem.

A Handbook Communicates Important Information. Management often wastes a lot of time answering the same questions over and over. Handbooks that include a recap of benefits, work times, dress codes, lunch rules, and other “everyday” issues saves the time and energy of management personnel.

Handbooks Allow Employers To Make Many Key Decisions Ahead Of Time. Policy decisions concerning everything from dress codes, to smoker’s rights, to personal internet blogs, to privacy concerns in the workplace can all be carefully thought out, discussed, and decided upon before an issue actually arises. This means that long range implications and other, more subtle, matters can be part of management’s decision-making process. Such matters are not always at the forefront when an incident happens and a decision must be made quickly.

Obviously, there are many other good reasons to have a handbook. These represent just a small sampling of why, if your business does not have an employee handbook, you may want to seriously consider creating and implementing one for the wellbeing of your company. And, for those who already have such handbooks, they do your business no good if they are not updated regularly to accurately reflect both the law and the actual working conditions in your place of employment. Similarly, policies that are not enforced, or enforced sporadically, are not helpful or legally protective. As such, I urge you to regularly review and revise your handbooks as needed.

This post was written by Shawn Lochinger. Mr. Lochinger provides legal counsel to Mid Atlantic BX and has been practicing law at Rhoads & Sinon, LLP, with an emphasis on employment law, for 25 years. Comments or questions can be directed to him at SLochinger@Rhoads-Sinon.com or by calling him directly at (717) 231-6696.

07/01/2013

Construction companies with federal and state contracts subject to Davis-Bacon Law have the opportunity to use prevailing wage fringe benefits to gain a competitive advantage in the market place. The Davis-Bacon Act of 1931 is a United States federal law that establishes the requirement for paying the local prevailing wages on public works projects for laborers and mechanics. It applies to “contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works”.

The prevailing wage fringe benefits can be used as follows:

Into a vacation fund

Into an approved apprenticeship program or trust

Furnish “bona fide” fringe benefits

As cash, and have it treated as wages

When prevailing wage fringe benefits are paid as cash and treated as wages, it is costly to the employer as they are subject to payroll taxes. This can result in the Company estimating their bid cost higher than if they were having the fringe benefits contributed into a bona fide Plan:

By contributing the prevailing wage fringe benefits into a “bona fide” plan, the bid cost is reduced and the Company may gain a competitive edge over their competitors.

03/18/2013

The U.S. Citizenship and Immigration Services has revised the Employment Eligibility Verification Form I-9, which all employers are required to complete for each employee hired in the United States. “The revisions to Form I-9 contain formatting changes and the inclusion of additional data fields,” according to the Department of Homeland Security Notice published on March 8, 2013, in the Federal Register. “Employers are required to use the Form I-9 to verify the identity and employment authorization eligibility of their employees.” Employers must use the new version of the form for all new hires and re-verifications, effective immediately. Employers may continue to use previously accepted versions (rev. 02/02/09)N and (rev. 08/07/09)Y until May 7, 2013. After May 7, 2013, employers must only use the new version.

02/18/2013

American Subcontractors Association of Central PA (ASACP) in conjunction with the U.S. Immigration and Customs, Department of Homeland Security, and local Attorney and ASACP Member, Tom Williams of Reager & Adler, P.C. will be holding a webinar on Friday February 22nd in the Community Room on the second floor of the Giant Food Store at 3301 Trindle Road, Camp Hill, PA 17011. Sign-in will begin at 11:30 with the webinar running from 12:00 pm to 1:30 pm. Lunch will be provided. The cost of the webinar is $15 for members of ASACP and $25 for non-members.

In June 2012, Pennsylvania Governor Tom Corbett signed Senate Bill 637 requiring all contractors and subcontractors doing public work to begin using the Employment Verification Program operated by the Department of Homeland Security to verify employment eligiblty. Effective January 1, 2013.

10/01/2012

You have likely been to a seminar or other event that discussed fraud. Many of those discussions include falsifying invoices/checks and petty cash theft. However there are many types of fraud unique to construction contractors that you should consider and be aware of. We are providing you this multi part series on construction fraud to help you think about unique fraud that could directly impact your business.

If you are reading this article it is likely that you deal with or have dealt with federal and state construction contracts in some capacity. Federal and state contracts keep a lot of contractors growing and prosperous. With the aging of America's infrastructure these contracts are not going away any time soon! If you are familiar with these contracts you also know they are heavily regulated and monitored by the awarding agencies. There have been several recent cases prosecuted by the federal government in which contractors (general and subs) have not adhered to the policies set forth in the contracts. One particular requirement in federal and state contracts is a requirement to subcontract with Minority Business Enterprises (MBE) and Women owned Business Enterprises (WBE). The specific cases that have been prosecuted include instances where the MBE's or WBE's did not perform the work as required in the contract with the government. But rather the general contractor had performed the work themselves and represented to the government that the work had been performed by the MBE or WBE.

Contractors new to working with the federal or state government may not realize the severity of not adhering to these requirements. A quick search on Google will show many cases recently that have been prosecuted by the government for failing to adhere to these requirements. The government is monitoring these contracts and IS prosecuting. If you have contracts with the government you should have someone on your team responsible for monitoring such parts of these contracts. You're subcontracting process should include controls to ensure that you are contracting with appropriate MBE's and WBE's if required by your contracts. The process should also include verifying these businesses are performing the work that you have stated they would do as part of the contract.

To some organizations these contract requirements may seem relatively small or not important, however, your company could be at risk for large fines and penalties for potentially defrauding the government. Many contractors rely heavily on federal and state contracts for a large portion of their annual revenue. Such prosecution may even result in suspension and debarment from contracting with the federal government. The outcome would be much more severe than a one time penalty. These requirements should be taken seriously by your organization. You should have processes in place to monitor and control these requirements if stated in your contracts with a government agency.

08/27/2012

On July 5, 2012, Governor Corbett signed into law the "Public Works Employment Verification Act" (also known as Act 127), which becomes effective January 1, 2013. The Act applies to "public work," as that term is defined in the Pennsylvania prevailing wage law, and includes the construction, reconstruction, demolition and/or repair work (other than maintenance work) paid for in whole or in part with state, municipal or county funds where the cost of the project exceeds $25,000.

In a nutshell, the Act requires public works contractors and subcontractors of all tiers to use the federal E-verify system for all new employees. The E-verify system can be found on the Department of Homeland Security's website. The Act does not require E-verify be used for existing employees, and it specifically exempts entities that only supply material suppliers.

A contractor must provide a written verification to the public body that he has complied with the Act prior to being awarded any public work. The verification form which contractors can use will be posted on the Pennsylvania Department of General Services' (DGS) website. A subcontractor must provide the public body with a verification form prior to commencing work on the public project. In addition to the verification forms, any contract between a contractor and a subcontractor must contain information about the requirements of the Act. Although the Act does not expressly require this, it may be good practice to include similar information in contracts between subcontractors because of the verification requirements.

The Act empowers DGS to conduct audits of both contractors and subcontractors that perform public work. While DGS is given the power to conduct the audits, the Act specifically states that it can seekcooperation from other state agencies (e.g., the Pennsylvania Department of Labor and Industry). The Act contains protections for employees who report violations and/or who participate in investigations.

If a contractor or subcontractor fails to comply with the Act, the penalties include a warning letter for a first violation, a thirty-day debarment for a second violation, a 180-day to one-year debarment for a third violation, and a three-year debarment from public work for a willful violation of the Act. DGS can also impose civil penalties of up to $1,000 for each violation. In grading a violation as a first, second or third offense, the Act gives DGS the power to look back ten years for prior violations.

Finally, the Act contains a "good faith immunity" defense. If a contractor or subcontractor can demonstrate that they relied in good faith upon the E-verify system and can produce written evidence that they used it, they will not be liable under the Act for any penalties imposed by the Act. Therefore, when you use the E-verify system, you should keep the written confirmation in your files. If you engage an employment service to perform background checks for your employees, then you should request and retain copies of the E-verify records.

This post was written by Tom Beckley of Beckley and Madden law offices. Mr. Beckley is also the legal counsel for the American Subcontractors Association of Central Pennsylvania. Mr. Beckley can bereached at becks@pa.net or contact the construction professionals at McKonly and Asbury, LLP.

03/26/2012

Litigation you might say holds no certainty but uncertainty. From the strategies of your opponent, to the ultimate outcome, the process of litigation is laden with events and decisions over which the participants may have little or no control, and as such it cannot be accurately predicted. Even the costs and amount of attorney fees to be expended cannot be estimated with certainty. This is the nature of litigation. In some cases, a litigant may even be on the hook for its opponent’s attorney fees if he loses. When a party is faced with the possibility of paying the attorney fees of the other side, the decision to commence litigation or to defend a lawsuit rather than settling is daunting, possibly to the point of total surrender. Because attorney fees could exceed the amount of the original claim itself, this possibility can be paralyzing.

Of course you don’t have to worry about any of this if your attorney has assessed your case as a “slam dunk” or a “guaranteed winner”. Unfortunately, like unicorns and the tooth fairy, such things do not exist in the real world. Business owners, along with the assistance of wise counsel, must make a realistic assessment of their litigation exposure and risk of loss: a sober, unvarnished review of the strengths, and yes, the weaknesses too. Studies support this prudent approach, as statistics developed by the Bureau of Justice Statistics have shown that 33% of plaintiffs and 66% of defendants end up on the losing end of their contract disputes at trial. Although Pennsylvania law generally requires that each party in ligation pay their own attorney fees, it is becoming increasingly common for parties to shift the risk of attorney fee costs to the other side by including an attorney fee provision in their contracts.

Now it is possible to insure against the possibility of paying one’s opponent’s attorney fees in breach of contract lawsuits by purchasing Contract Litigation insurance. This relatively new insurance product may provide just the leverage and confidence necessary to initiate litigation to pursue claims or to defend against dubious claims rather than capitulating under the risk of paying your opponent’s attorney fees in the event the court sides with your adversary.

To learn more about Contract Litigation Insurance and its benefits, please contact Tom Williams of Reager & Adler, PC. Tom can be contacted at twilliams@reageradlerpc.com. To learn more about other trends impacting the construction community contact your construction professionals at McKonly & Asbury, LLP.

12/19/2011

The Internal Revenue Service (IRS) Dec. 9 announced the 2012 optional standard mileage rate to use for computing the deductible costs of operating an automobile for business will be 55.5 cents per mile.

The new rate will go into effect beginning Jan. 1, 2012, and will apply to the use of cars, vans, pickup trucks or panel trucks.

The standard mileage rates for business purposes are based on an annual study of the fixed and variable costs of operating an automobile. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. The business standard mileage rate cannot be used for more than four vehicles used simultaneously.

For more information on the standard mileage rates, visit the IRS website.